India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

BOX 9.3 Illegal <strong>and</strong> Counterfeit Cottonseeds in <strong>India</strong>
Enforcement <strong>of</strong> biosafety <strong>and</strong> IPR laws remains an ongoing challenge in <strong>India</strong>. Biotech seeds must be
approved by the <strong>India</strong>n biosafety system; seeds that do not obtain regulatory approval are illegal. In 2001,
unapproved biotech cottonseed was found in farmers’ fields in Gujarat, while the MMB product was still being
reviewed by regulators for release. The illegal seed was identified as NB 151, a variety registered as a
conventional hybrid by NavBharat Seeds but containing the Bt genetics developed by MMB.
NavBharat Seeds was banned from the cottonseed business <strong>and</strong> prosecuted for violating biosafety laws, but
the production, distribution, <strong>and</strong> widespread use <strong>of</strong> NB 151 reportedly continues today. The seed is produced
through a network <strong>of</strong> seed companies, producers, <strong>and</strong> agents, many <strong>of</strong> whom are former contract growers for
NavBharat Seeds. Illegal Bt cottonseed production <strong>and</strong> sales reportedly are concentrated in Gujarat <strong>and</strong>, to a
lesser extent, in Punjab, Maharashtra, <strong>and</strong> Andhra Pradesh. According to press reports, 5 million packets <strong>of</strong>
illegal seeds were produced in Gujarat in 2007. Government raids have had limited effect in stopping the
activity.
Counterfeit cottonseeds also are a substantial problem. Dealers label counterfeits with names similar to wellknown
Bt cotton sources—for example, “Mahaco” rather than “Mahyco.” The counterfeits do not carry the
insect-resistant trait <strong>of</strong> legitimate products. As mentioned elsewhere, “brown bagging,” where farmers <strong>and</strong> other
parties sell repackaged br<strong>and</strong>ed seed <strong>and</strong> seed <strong>of</strong> unknown origin in brown bags in village markets, is also a
common practice.
Drawn-out regulatory proceedings, by keeping potentially high-dem<strong>and</strong> legitimate products out <strong>of</strong> the market,
create a void that may be filled by illicit goods. In recognition <strong>of</strong> the importance <strong>of</strong> more timely regulatory
review, <strong>India</strong> recently announced that it would adopt a new approval mechanism for cotton hybrids—one that
will be based on genetic events (i.e., particular genetically engineered organisms) rather than on the particular
hybrid. Under this new mechanism, any cotton hybrid incorporating one <strong>of</strong> the four already approved genetic
events will go through a streamlined review process. This change is intended to ease market access for
legitimate <strong>and</strong> safe products.
Sources: Lalitha, Pray, <strong>and</strong> Ramaswami, “The Limits <strong>of</strong> Intellectual Property Rights,” March, 2008, 10–11;
Business St<strong>and</strong>ard, “Guj Worst-Hit by Illegal Bt Cotton Production,” April 22, 2008; Government <strong>of</strong> <strong>India</strong>,
Ministry <strong>of</strong> Environment <strong>and</strong> Forests, “New Procedure for Commercial Release <strong>of</strong> Bt Cotton Hybrids,”
February 20, 2009; <strong>and</strong> Herring, “Persistent Narratives,” 2009, 16–17.
High regulatory costs <strong>and</strong> lengthy procedures also can result in products being withdrawn
from consideration if the costs <strong>of</strong> compliance outweigh the benefits the firm can obtain in
a particular market. 51 Bayer CropScience, for example, reportedly pulled its biotech
mustard seed from regulatory consideration in <strong>India</strong> in 2003 after approximately nine
years <strong>of</strong> review <strong>and</strong> testing <strong>and</strong> millions <strong>of</strong> dollars in costs. Bayer reported that the
continued costs, uncertainty about whether the product would ever be approved, <strong>and</strong>
potentially small market size all contributed to its decision not to continue with
commercialization <strong>of</strong> the product in <strong>India</strong>. 52
Regulatory review that is not timely <strong>and</strong> science-based does not serve either farmers or
the consuming public. Biotech seeds are being developed to incorporate traits such as
pest resistance, drought tolerance, <strong>and</strong> yield <strong>and</strong> nutritional enhancement that could
substantially assist <strong>India</strong> in meeting its goals <strong>of</strong> self-sufficiency, food security, <strong>and</strong>
supporting farmer incomes. 53 A large number <strong>of</strong> such products are currently undergoing
regulatory review in <strong>India</strong>. 54 The product closest to completing review appears to be Bt
51 Researchers have compared the costs <strong>of</strong> biosafety review in <strong>India</strong> <strong>and</strong> China <strong>and</strong> found that the cost <strong>of</strong>
initial approval <strong>of</strong> Bt cotton in <strong>India</strong> exceeded the cost in China by a ratio <strong>of</strong> 20:1, <strong>and</strong> that approval took
substantially more time in <strong>India</strong>. Pray, et al., “Costs <strong>and</strong> Enforcement,” 2006, 146–50.
52 Pray, Bengali, <strong>and</strong> Ramaswami, “The Cost <strong>of</strong> Biosafety Regulations,” 2005, 273.
53 These goals are discussed in chapter 1.
54 Singh, <strong>India</strong>: Agricultural Biotechnology, July 24, 2009, 3.
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